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Auditor Report of Andhra Sugars Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of The Andhra Sugars Ltd., which comprise the Balance sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements :

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting standards specified under section 133 of the Act, read with Rule 7 of Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circum- stances, but not for the purpose of expressing an opinion on whether the company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion :

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by theAct in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor's Report) Order,2015("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

2) As required by Section 143(3) of the Companies Act, 2013 we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the other matters to be included in the Auditor's report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 26 to the financial statements;

ii. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses ; and

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure to the Independent Auditors' Report:

The Annexure referred to in Paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements" of our report of even date, to the members of THE ANDHRA SUGARS LIMITED, TANUKU for the year ended 31st March 2015. We report that:

(i) (a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed assets.

(b) The Fixed assets are physically verified by the management according to a phased program designed to cover all the items over a period of three years which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. Pursuant to the program of physical verification of fixed assets, during the year the management has verified all fixed assets of divisions located at Saggonda and Kovvuru except furniture and fixtures. No material discrepancies were noticed on such physical verification.

(ii) (a) The inventory has been physically verified by the management at reasonable intervals during the year under report. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of its inventory. The discrepancies noticed on physical verification of inventories as compared to book records were not material.

(iii) (a) The Company has granted loan to its Associate company for an amount of Rs. 1500 lacs (Maximum balance Rs. 1500 lacs) covered in the register maintained under section 189 of the Companies Act.

(b) The loan granted to the Associate Company covered in the register maintained under section 189 of the Act, the borrower has been regular in the payment of the interest as stipulated. The terms of arrangement stipulates that the repayment of principal is on or before 31st March, 2016.

(c) There are no overdue amounts of more than rupees one lac in respect of the loan granted to its Associate Company covered in the register maintained under section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. Further, during the course of our audit, we have not come across any instances of major weaknesses in internal control that require correction and have so continued without correction.

(v) In our opinion the company has complied with the provisions of section 73 to 76 and other applicable provisions of the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014 with regard to the deposits accepted from the public. According to the information furnished to us, no Order has been passed on the company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for non-compliance with the provisions of Sections 73 to 76 of the Companies Act, 2013.

(vi) We have broadly reviewed the books of account and records maintained by the company at its Sugar units, Caustic Soda division, Caustic Potash division, Sulphuric Acid divisions, and Superphosphate division pursuant to the Rules made by the Central Government for the maintenance of Cost Records under section 148 of the Companies Act, 2013 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and the basis of our examination of the records of the company, in our opinion, the company is regular in depositing with the appropriate authorities, the undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, duty of Customs, duty of Excise, Value added tax, cess and other material statutory dues applicable to it.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, duty of customs or duty of excise or value added tax or cess and other material statutory dues applicable to it; and the following undisputed statutory dues were outstanding, as at the date of Balance Sheet under report, for a period of more than six months from the date they became payable.

Amount Sl. No. Name of the statute Period Remarks

(Rs. in lakhs)

1. Andhra Pradesh State Excise Act Upto August, 1976 3.58 Pending receipt of

(establishment demand by the

charges) Company

2. Andhra Pradesh State Excise Act August, 1976 to 16.59 Pending receipt of

March, 2015 (Interest on above) demand by the

Company

(b) According to the information and explanations given to us, there were no amounts of Sales Tax, Customs Duty, Cess, Income Tax, Wealth Tax, Service Tax that have been disputed by the company, and hence, were not remitted to the concerned authorities at the date of the Balance Sheet under report, except

S. No Nature of dues Name of the Period Amount Forum

statute (Rs. In lacs) where the

dispute is pending

1 Water (Preven tion and Cess 01-04-78 to 1990-91 0.50 Appellate control of Pollution) Committee of cess Act, 1977 the Govt. of A.P.

2 Sales Tax laws in different Sales Tax 2002-03 to 2011-12 106.77 Different States appellate

Authorities

3 Income Tax Act, 1961 Income Tax 2007-08 to 2014-15 1196.46 Commissioner

of Income Tax, Appeals

4 Central Excise Act, 1944 Excise duty 2002-03 to 2013-14 4274.14 Different

departmental appellate authorities

5 Service Tax Law Service Tax 2004-05 to 2011-12 85.29 Commissioner

of Service Tax

(c) According to the information and explanations given to us, the amounts which were required to be transferred to the Investor Education and Protection Fund in accordance with relevant provisions of the Companies Act, 1956 and rules there under have been transferred to such fund within time.

(viii) The company had no accumulated losses at the end of the financial year, and it did not incur cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) According to the records of the company examined by us, and the information and explanations given to us, there were no defaults in repayment of dues to banks at the date of the Balance Sheet.

(x) In our opinion, and according to the information and the explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions , except in respect of repayment, out of its cane price due to its sugar cane suppliers, agricultural loans taken by them from banks, the terms and conditions of which, in our opinion are not prima facie prejudicial to the interest of the company.

(xi) In our opinion, and according to the information and explanations given to us, the term loans taken by the company have been applied for the purpose for which they were raised.

(xii) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted audited practices in India, and according to the informa- tion and explanations given to us, we have neither come across any instance of material fraud on or by the company, noticed or reported during the year, nor have we been informed of any such case by the management.

For BRAHMAYYA & CO. Chartered Accountants Firm Registration Number:000513S Camp : Hyderabad (T.V. Ramana)

Date : 26th May, 2015 Partner

(ICAI Membership Number: 200523)


Mar 31, 2014

We have audited the accompanying financial statements of The Andhra Sugars Limited, Tanuku which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements:

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, read with the General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion:

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014

b. in the case of the Statement of Profit and Loss, of the profit for the year ended on that date and

c. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor''s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books ;

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the Directors as on March 31, 2014 and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2014 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under Section 441A of the Companies Act, 1956 nor has it issued any Rules under the said Section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure to the Independent Auditors'' Report:

The Annexure referred to in Paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements" of our report of even date, to the members of THE ANDHRA SUGARS LIMITED for the year ended 31 March, 2014. We report that :

1.1 According to the information and explanations furnished to us, the Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets except in the case of furniture and fixtures.

1.2 According to the information and explanations furnished to us, the Company has informed us that it has adopted a phased programme of verification of its fixed assets. In our opinion such a programme is reasonable and adequate in relation to the nature and location of the Fixed Assets. In accordance with the said programme of physical verification of fixed assets, during the year the management has verified all fixed assets of Sugar divisions located at Tanuku, Taduvai and Bhimadole except furniture & fixtures. No material discrepancies were noticed on such physical verification.

1.3 According to the information and explanations furnished to us, the Company has not disposed of a substantial part of its fixed assets during the year as to affect the going concern assumption in preparing the financial statements under report.

2.1 According to the information and explanations furnished to us, during the year under report the Company has physically verified its inventories of Raw Materials, Finished Goods & Stores and Spares, situated at Kovvur, Taduvai, Bhimadole and Saggonda. In our opinion, the frequency of such verification to the extent carried out is reasonable.

2.2 In our opinion, the procedures of physical verification of inventories, as followed by the management in respect of such verification carried out during the year are reasonable and adequate in relation to the size of the Company and the nature of its business.

2.3 According to the information furnished to us, the Company is maintaining proper records of its inventory. The discrepancies, if any, noticed on verification of Raw Materials, Finished Goods & Stores and Spares between the physical stocks to the extent verified during the year and the book records were not material, and have been properly dealt with in the books of account.

3.1 According to the information and explanations furnished to us, the Company has granted unsecured loans to two companies for an amount of Rs. 1100 lacs (Aggregate Maximum balance of Rs.1000 lacs), covered in the Register maintained under Section 301 of the Companies Act, 1956 and the same was repaid by those companies during the year under report.

3.2 According to the information and explanations furnished to us, the rate of interest and terms and conditions given by the Company are not prima facie prejudicial to the interest of the Company and the Company is in receipt of principal amount and interest thereon as per the stipulations mentioned in the agreement.

3.3 According to the information and explanations furnished to us, the Company has taken Fixed deposits/ inter-corporate loans aggregating at the date of the Balance Sheet to Rs.11148.25 lakhs from thirty six parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

3.4 In our opinion, the rate of interest and other terms and conditions on which loans/deposits have been taken by the Company from parties covered in the Register maintained under Section 301 of the Compa- nies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

3.5 According to the information and explanations furnished to us, the Company has been regular in repaying the principal and interest amounts as stipulated on the loans taken by it from the parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and with regard to the sale of goods and services. Further, during the course of our audit, we have not come across any instances of major weaknesses in the internal control system, that in our opinion, require correction but have so continued without correction.

5.1 Based on the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the Register required to be maintained under that Section.

5.2 In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements that have been entered in the Register referred to in Sec- tion 301 of the Companies Act have been made at prices which are reasonable having regard to prevail- ing market prices and other terms of business with such parties, at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A, 58AA and other relevant provisions of the Act and Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information furnished to us, no Order has been passed on the Company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for non- compliance with the provisions of Sections 58A, 58AA of the Companies Act, 1956.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the books of account and records maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of Cost Records under Section 209 (1) (d) of the Companies Act, 1956, wherever prescribed, and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we are not required to and have not carried out a detailed audit of the same.

9.1 According to the information furnished to us, the Company has been generally regular in depositing with the appropriate authorities, the undisputed statutory dues including Provident Fund, Investors Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it; and the following undisputed statutory dues were outstanding, as at the date of the Balance Sheet under report, for a period of more than six months from the date they became payable,.

Amount Sl.No. Name of the statute Period Remarks Rs. in lakhs

1. Andhra Pradesh State Excise Act Upto August, 1976 3.58 Pending receipt of (establishment demand by the charges) Company

2. Andhra Pradesh State Excise Act August, 1976 to 16.17 Pending receipt of March, 2014 (Interest on above) demand by the Company

9.2 According to the information furnished to us, at the date of the Balance Sheet, there were no amounts of Sales Tax, Customs Duty, Excise Duty, Cess, Income Tax, Wealth Tax and Service Tax that were disputed by the company and hence were not remitted to the concerned authorities, except the following:

Sl. No. Name of the statute Nature of the Dues Amount Forum where dispute is Rs. in lakhs pending

1 Water (Prevention and control of Cess 0.50 Appellate Committee Pollution) Cess Act , 1977 of the Govt. of AP

2 Sales Tax laws in different States Sales Tax 106.77 Different appellate authorities

3 Income Tax Act, 1961 Income Tax 31.35 Commissioner of Income Tax, Appeals

4 Central Excise Act, 1944 Excise Duty 4177.24 Different departmental appellate authorities

5 Service Tax Law Service Tax 32.16 Commissioner of Service Tax

10. According to the information and explanations furnished to us, the Company had no accumulated losses at the end of the year under report and it did not incur cash losses during the said year or in the immediately preceding Financial Year.

11. In our opinion and according to the information and explanations furnished to us by the Company, there were no defaults in repayment of its dues to financial institutions, banks or debenture holders at the date of the Balance Sheet.

12. According to the information furnished to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures, and other securities.

13. In our opinion and according to the information and explanations furnished to us, the Company is not a chit fund or a nidhi / mutual benefit fund/ society and hence, the requirements of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company during the year under report.

14. According to the information furnished to us, the Company is not dealing in or trading in shares, securi- ties, debentures and other investments. Accordingly, the requirements of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

15. According to the information furnished to us, the Company has not given any guarantees for loans taken by others from any banks or financial institutions, except in respect of repayment, out of its cane price dues to its sugarcane suppliers, the agricultural loans taken by them from banks, the terms and condi- tions of which, in our opinion are not prima facie prejudicial to the Company.

16. In our opinion, and according to the information and explanations furnished to us, the term loans ob- tained by the Company have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that considering the internal accruals of the Company during the year under report, funds raised by the Company on short–term basis have prima facie not been used for long-term investment.

18. According to the information and explanations furnished to us, the Company has not made any preferen- tial allotment of shares during the year to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. According to the information and explanations given to us, the Company has not issued any debentures during the year under report.

20. The Company has not raised any moneys through public issue of its securities during the year and the question of end use of such moneys does not arise during the year.

21. During the course of our examination of the accounts of the Company in accordance with generally accepted auditing practices, we have not come across any instances of fraud on or by the Company, nor have we been informed by the management, of any such instance being noticed or reported during the year.

For BRAHMAYYA & CO.

Chartered Accountants

Firm Registration Number: 000513S

Camp: Tanuku (T.V. Ramana)

Date: 26th May, 2014 Partner

Membership Number: 200523


Mar 31, 2013

Report on the Financial Statements:

We have audited the accompanying financial statements of The Andhra Sugars Limited, Tanuku which comprise the Balance Sheet as at March 31, 2013 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements:

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion:

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b. in the case of the Statement of Profit and Loss , of the profit for the year ended on that date and

c. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date

Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books ;

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441 A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure referred to our report of even date,

1.1 According to the information and explanations furnished to us, the Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets except in the case of furniture and fixtures.

1.2 According to the information and explanations furnished to us, the Company has informed us that it has adopted a phased programme of verification of its fixed assets. In our opinion such a programme is reasonable and adequate in relation to the nature and location of the Fixed Assets. In accordance with the said programme of physical verification of fixed assets, during the year the management has verified all fixed assets of various divisions located at Kovvur and Saggonda except furniture & fixtures. No material discrepancies were noticed on such physical verification.

1.3 According to the information and explanations furnished to us, the Company has not disposed of a substantial part of its fixed assets during the year as to affect the going concern assumption in preparing the financial statements under report.

2.1 According to the information and explanations furnished to us, during the year under report the Company has physically verified its inventories of Raw materials, Finished goods & stores and spares, situated at Kovvur and Saggonda. In our opinion, the frequency of such verification to the extent carried out is reasonable.

2.2 In our opinion, the procedures of physical verification of inventories, as followed by the management in respect of such verification carried out during the year are reasonable and adequate in relation to the size of the Company and the nature of its business.

2.3 According to the information furnished to us, the Company is maintaining proper records of its inventory. The discrepancies, if any, noticed on verification of Raw Materials, Finished goods & Stores and Spares between the physical stocks to the extent verified during the year and the book records were not material, and have been properly dealt with in the books of account.

3.1 According to the information and explanations furnished to us, the Company has granted unsecured loan to one company for an amount of Rs. 100 lacs (Maximum balance of Rs.500 lacs), covered in the register maintained under section 301 of the Companies Act, 1956.

3.2 According to the information and explanations furnished to us, the rate of interest and terms and condi- tions given by the Company are not prima facie prejudicial to the interest of the Company and the Company is in receipt of principal amount and interest thereon as per the stipulations mentioned in the agreement.

3.3 According to the information and explanations furnished to us, the Company has taken Fixed deposits/ inter-corporate loans aggregating at the date of the Balance Sheet to Rs.9988.35 lakhs from thirty nine parties covered in the register maintained under Section 301 of the Companies Act, 1956.

3.4 In our opinion, the rate of interest and other terms and conditions on which loans/deposits have been taken by the Company from parties covered in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

3.5 According to the information and explanations furnished to us, the Company has been regular in repaying the principal and interest amounts as stipulated on the loans taken by it from the parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and with regard to the sale of goods and services. Further, during the course of our audit, we have not come across any instances of major weaknesses in the internal control system, that in our opinion, require correction but have so continued without correction.

5.1 Based on the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

5.2 In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements that have been entered in the Register referred to in Section 301 of the Companies Act have been made at prices which are reasonable having regard to prevailing market prices and other terms of business with such parties, at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of sections 58A, 58AA and other relevant provisions of the Act and Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information furnished to us, no Order has been passed on the Company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for non- compliance with the provisions of Sections 58A and 58AA of the Companies Act, 1956.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the books of accounts and records maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of Cost Records under section 209 (1) (d) of the Companies Act, 1956, wherever prescribed, and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we are not required to and have not carried out a detailed audit of the same.

9.1 According to the information furnished to us, the Company has been generally regular in depositing with the appropriate authorities, the undisputed statutory dues including Provident Fund, Investor Education Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it and the following undisputed statutory dues were outstanding, as at the date of the Balance Sheet under report, for a period of more than six months from the date they became payable:

Amount Sl. No. Name of the statute Period Remarks ` in lakhs

1. Andhra Pradesh State Excise Act Upto August, 1976 3.58 Pending receipt of (establishment demand by the charges) Company

2. Andhra Pradesh State Excise Act August, 1976 to 15.74 Pending receipt of March, 2013 (Interest on above) demand by the Company

9.2 According to the information furnished to us, at the date of the Balance Sheet, there were no amounts of Sales Tax, Customs Duty, Excise Duty, Cess, Income Tax, Wealth Tax and Service Tax that were disputed by the company and hence were not remitted to the concerned authorities, except the following:

Sl. No. Name of the statute Nature of the Amount Forum where dispute is Dues in lakhs pending

1 Water (Prevention and control of Cess 0.50 Appellate Committee Pollution) Cess Act , 1977 of the Govt. of AP

2 Sales Tax laws in different States Sales Tax 390.04 Different appellate authorities

3 Income Tax Act, 1961 Income Tax 79.92 Commissioner of Income Tax Appeals

4 Central Excie Act, 1944 Excise Duty 4075.73 Different departmental appellate authorities

5 Service Tax Law Service Tax 29.78 Commissioner of Service Tax

10. According to the information and explanations furnished to us the Company had no accumulated losses at the end of the year under report and it did not incur cash losses during the said year or in the immedi- ately preceding financial year.

11. In our opinion and according to the information and explanations furnished to us by the Company, there were no defaults in repayment of its dues to financial institutions, banks or debenture holders at the date of the Balance Sheet.

12. According to the information furnished to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures, and other securities.

13. In our opinion and according to the information and explanations furnished to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society and hence, the requirements of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company during the year under report.

14. According to the information furnished to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the requirements of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

15. According to the information furnished to us, the Company has not given any guarantees for loans taken by others from any banks or financial institutions, except in respect of repayment, out of its cane price dues to its sugarcane suppliers, the agricultural loans taken by them from banks, the terms and conditions of which, in our opinion are not prima facie prejudicial to the Company.

16. In our opinion, and according to the information and explanations furnished to us, the term loans obtained by the Company have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that considering the internal accruals of the Company during the year under report, funds raised by the Company on short–term basis have prima facie not been used for long-term investment.

18. According to the information and explanations furnished to us, the Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. According to the information and explanations given to us, the Company has not issued any debentures during the year under report.

20. The Company has not raised any moneys through public issue of its securities during the year, and the question of end use of such moneys does not arise during the year.

21. During the course of our examination of the accounts of the Company in accordance with generally accepted auditing practices, we have not come across any instances of fraud on or by the Company, nor have we been informed by the management, of any such instance being noticed or reported during the year.

For BRAHMAYYA & CO] Chartered Accountants

Firm Registration Number: 000513S

Camp: Tanuku (T.V. Ramana)

Date: 27th May 2013 Partner

Membership Number:200523


Mar 31, 2011

We have audited the attached Balance Sheet of THE ANDHRA SUGARS LIMITED, as at 31st March 2011, its Profit and Loss account and also the Cash-Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India, which require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes an assessment of the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors' Report) Order, 2003 issued by the Government of India in terms of sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Attention is invited to the Para No. 14(b) of the notes forming part of accounts regarding change in treatment of valuation of Hydrochloric Acid from Joint Product to By-product, resulting in increase in profit by Rs.4.94 lacs and consequently increases in inventories to the extent of the Company during the year under report. Further to our comments in the Annexure referred to above, we report that:

a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

b. In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of such books;

c. The Balance Sheet and Profit and Loss Account and Cash-flow Statement dealt with by this report are in agreement with the books of account;

d. In our opinion, the Balance Sheet, Profit and Loss account and Cash-flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ;

e. On the basis of written representations received from the Directors, as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2011 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

I. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;

II. in the case of the Profit and Loss Account, of the Profit for the year ended on that date, and

III. in the case of the Cash-flow Statement, of the cash-flows of the Company for the year ended on that

For BRAHMAYYA & CO.,

Chartered Accountants

Camp : TANUKU

(Firm Regn. No. 000513S)

Date : 28th July, 2011 T.V. RAMANA

Partner (Membership No. 200523)

 
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